COP26 has put ‘green’ investments firmly on the map as former Bank of England governor Mark Carney has declared a “watershed” moment in financing the world’s move to net zero.
Earlier, Chancellor Rishi Sunak had announced that 450 firms controlling around 40% of global assets would align themselves to the Paris Agreement 1.5C warming limit, unlocking $130 trillion of private capital to fund the green transit.
Independent financial adviser, Becky Hammonds of Willow Financial Solutions, looks at whether renewable energy is a worthwhile investment opportunity.
Investing in an emerging sector like renewable energy is higher-risk. That’s why it is often only included as a small part of a well-diversified portfolio. That way, if your investment doesn’t do well, it doesn’t have such a dramatic impact.
How to invest?
Many renewable energy companies aren’t listed on a stock market though – known as ‘unquoted’ companies. That makes their shares more difficult to buy and sell. Investing in them also normally requires large sums, making them off-limits to most everyday investors but plans may well be afoot to make this easier.
Investment trusts can be a way to get around this. They pool investors’ money to make up the big amounts needed to invest in unquoted renewable energy companies. Their ‘closed-ended’ nature also means they’re never forced sellers of companies, including hard-to-sell unquoted ones.
As a result, investment trusts are a good way to invest in renewable energy. Specialist managers and teams use their experience and expertise to invest in a range of companies they think have the best long-term potential.
Some trusts focus on one type of renewable energy, such as wind or solar, while others invest across a range of renewables. An experienced independent financial adviser will be able to help you to target your investments.
For protection, pensions and investment advice contact Becky Hammonds on 07969 269677 or email firstname.lastname@example.org